Ten million US dollars is not enough: The SEC criticizes Ripple’s latest argument for a lower penalty. Gary Gensler remains tough in the XRP trial.
Ripple Labs Requests Reduced Penalty in XRP Lawsuit, Citing SEC’s Settlement with Terraform Labs
On June 13, Ripple Labs renewed its plea for a reduced penalty in the ongoing XRP lawsuit, urging U.S. District Judge Analisa Torres to limit the fine to “no more than $10 million.” This request comes in light of the U.S. Securities and Exchange Commission’s (SEC) recent settlement with Terraform Labs. Ripple’s proposed penalty is significantly less than the $876.3 million civil penalty originally suggested by the SEC.
The SEC has responded to Ripple’s move, asserting that Ripple’s comparison with Terraform Labs is not applicable. The SEC explained that the settlement with Terraform Labs, which included a civil penalty of $420 million, resulted from unique circumstances. Unlike Ripple, Terraform Labs is currently bankrupt, has agreed to repay funds to investors, and has dismissed the executives responsible for the violations.
The legal battle between Ripple and the SEC has seen notable developments. In July 2023, Ripple secured a partial victory when Judge Torres ruled that XRP was not a security in the context of trades by private investors. However, she also determined that XRP must be considered a security when sold to institutional investors. This mixed ruling has had a significant impact on Ripple’s legal strategy and the broader cryptocurrency market.
As of now, XRP is trading at $0.49, a considerable drop from its value in the summer of 2023. The decline in XRP’s price reflects the ongoing uncertainty surrounding the lawsuit and the broader market dynamics.
The SEC’s proposed penalties for Ripple, if fully enforced, would amount to nearly $2 billion. This figure includes $198.2 million in upfront interest and another $876.3 million in clawbacks. Ripple’s request for a lighter penalty is a strategic effort to mitigate the financial impact of the lawsuit, drawing attention to the differing circumstances between their case and that of Terraform Labs. However, the SEC’s firm stance suggests that the regulatory body is determined to pursue significant penalties to enforce compliance and deter future violations in the cryptocurrency industry.
